Facebook has a long battered history with its customers. Users are so notoriously uppity about any minor change to Facebook's interface or settings that there's a satiric group on the site called I AUTOMATICALLY HATE THE NEW FACEBOOK HOME PAGE.

But Mark Zuckerberg's social network stepped in it when it launched instant personalization last month. The privacy settings that were unwieldy, confusing and obtuse. It's gotten so bad that the company's CEO penned an op-ed in the Washington Post to address the issue.

Starting tomorrow, new "drastically simplified" privacy controls will be available. But privacy problems at Facebook are likely to continue. That's because Facebook views privacy as a moving target defined by its bottom line rather than its commitment to users.

Mark Zuckerberg admits that his company has made some mistakes. He writes in The Washington Post:

"The biggest message we have heard recently is that people want easier control over their information. Simply put, many of you thought our controls were too complex. Our intention was to give you lots of granular controls; but that may not have been what many of you wanted. We just missed the mark."

And Zuckerberg hopes to rectify the problem:

"Sometimes we move too fast -- and after listening to recent concerns, we're responding."

Some weren't appeased by Zuckerberg's mea culpa. According to The Atlantic:

"When Zuckerberg goes national with equivocal statements like the ones above about privacy and user expectations, he damages the potential of his brand and his ideas."

The main issue with Facebook's moveable ideas on privacy are customer expectations — and their commitment to the product. Many people have developed complex, deep relationships with the social network that they're not going to give up easily.

As Dana Boyd puts it on her blog:

"Those with the most to gain from Facebook are the least likely to leave, even if they also have the most to lose."

Boyd, a Microsoft researcher, notes that it's people who don't use Facebook much that are abandoning the service. Like Newsweek's Dan Lyons, who writes:

"I've deactivated my account. I never used Facebook much anyway, so it's not such a big deal."

Lyons' main issue with Facebook is that the social network is making business decisions based on advertiser interest:

"The truth is, Zuckerberg needs your data. His business is built upon it. The most important thing to understand about Facebook is that you are not Facebook's customer, you are its inventory. You are the product Facebook is selling. Facebook's real customers are advertisers. You, as a Facebook member, are useful only because you can be packaged up and sold to advertisers. The more information Facebook can get from you, the more you are worth. In response, a FB spokesman told me: "I'm sorry you feel that way.""

Tech reporters leaving Facebook is not going to kill the social network. What it may do is draw more attention to the issue of consumer privacy.

In this case, it worked. Tomorrow, there will be simpler privacy controls for Facebook users. Chris Cox, vice president for product at the company, said at TechCrunch Disrupt that “It’s been a humbling couple of weeks for us."

Hopefully the new settings will also make it easier for users to do what they want with their information — whether that means making it public, restricting access, or opting out of all third party marketing, which is not currently possible.

The ongoing problem with Facebook's tenuous relationship with privacy is that even if they don't sufficiently address the privacy issue, people are likely to continue using the service. And that would give regulators an excellent case for stepping in. Already, Facebook staffers in DC will be testifying this week on the company's privacy policies. According to Boyd:

"It’s really important that those in power listen to what it is that people are upset about. The worst thing that those in power can do is ignore what’s going on, waiting for it to go away. This is a bad idea, not because people will walk away, but because they will look to greater authorities of power to push back. This is why Facebook’s failure to address what’s going on invites regulation."

Facebook is on track to bring in $1 billion in revenues this year. The site has 500 million members, up from 400 million only four months ago. It's a good thing that Facebook is addressing the concerns of its users (tech reporters included this week. But the company should also be learning from its mistakes. And as following Facebook's business policies for any length of time proves, that's not always the case.

Meghan Keane

Published 25 May, 2010 by Meghan Keane

Based in New York, Meghan Keane is US Editor of Econsultancy. You can follow her on Twitter: @keanesian.

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